Due to unresolved trade tensions, high international policy uncertainty and declining business confidence, the UN announced on May 21, a broad-based slowdown in the global economy and cut its growth predictions.
The data from UN Department of Economic and Social Affairs’s (DESA) mid-year World Economic Situation and Prospects (WESP) report, finds that all major developed economies, and most developing regions, have weakened prospects for growth.
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UN economists had also warned of ‘risks on the horizon’ in the beginning of the year, with those fears now having been revised downwards. In fact, growth for 2019 is predicted to be a moderate 2.7%, down from 3.4% in 2018.
DESA warns, however, that if trade tensions further escalate, along with the effects of climate change, and a sudden deterioration in financial conditions, the slowdown could be sharper, or could last longer.
This slowdown also means bad news for the UN’s 2030 Agenda for sustainable development, which contains a set of targets to end extreme poverty and promote prosperity, while also protecting the environment.
UN also informed that a weaker global economy puts essential investments at risk. Developing countries could feel the most impacts, especially those whose economies depend on markets which could be affected by tariffs and retaliatory measures.
The report notes that, despite the fact that poverty is concentrated in rural areas, the growing rate of population movements from the countryside to cities, must be carefully managed. This is particularly important for Africa and South Asia, which are expected to experience the most rapid pace of urbanization in the next two decades.
Urging for better-targeted policies to tackle the slump, Elliot Harris, UN Chief Economist and Assistant Secretary-General for Economic Development, said that:
It is increasingly clear that policies to promote sustainable development will need to look beyond GDP growth and identify new and more robust measures of economic performance that appropriately reflect the costs of inequality, insecurity and climate change
Finally, the report calls for a multilateral approach to global climate policy, including an explicit call for carbon pricing, which would force the private sector and governments to incorporate the environmental costs of consumption and production in their economic decision-making process.
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